Insurance Fraud and Abuse: A Very Serious Problem Stephen Barrett, M.D. Fraud and abuse are widespread and very costly to America's health- care system. Fraud involves intentional deception or misrepresentation intended to result in an unauthorized benefit. An example would be billing for services that are not rendered. Abuse involves charging for services that are not medically necessary, do not conform to professionally recognized standards, or are unfairly priced. An example would be performing a laboratory test on large numbers of patients when only a few should have it. Abuse may be similar to fraud except that it is not possible to establish that the abusive acts were done with an intent to deceive the insurer. Although no precise dollar amount can be determined, some authorities contend that insurance fraud constitutes a $100-billion-a-year problem. The United States Goverment Accountability Office (GAO) estimates that $1 out of every $7 spent on Medicare is lost to fraud and abuse and that in 1998 alone, Medicare lost nearly $12 billion to fraudulent or unnecessary claims [1]. Type of Fraud and Abuse False claim schemes are the most common type of health insurance fraud. The goal in these schemes is to obtain undeserved payment for a claim or series of claims [2]. Such schemes include any of the following when done deliberately for financial gain: Billing for services, procedures, and/or supplies that were not provided. Misrepresentation of what was provided; when it was provided; the condition or diagnosis; the charges involved; and/or the identity of the provider recipient. Providing unnecessary services or ordering unnecessary tests [3]. Many insurance policies cover a percentage of the physician's usual fee. Some physicians charge insured patients more than uninsured ones but represent to the insurance companies that the higher fee is the usual one. This practice is illegal. It is also illegal to routinely excuse patients from copayments and deductibles. (A copayment is a fixed dollar amount paid whenever an insured person receives specified health-care services. A deductible is the amount that must be paid before the insurance company starts paying.) It is legal to waive a fee for people with a genuine financial hardship, but it is not legal to provide completely free care or discounts to all patients or to collect only from those who have insurance. Studies have shown that if patients are required to pay for even a small portion of their care they will be better consumers and select items or services because they are medically needed rather than because they are free. Routine waivers thus raise overall health costs. They are considered fraudulent because averaging them with the doctor's full fees would make the usual fees lower than the amounts actually billed for. Other illegal procedures include: Charging for a service that was not performed. Unbundling of claims: Billing separately for procedures that normally are covered by a single fee. An example would be a podiatrist who operates on three toes and submits claims for three separate operations. Double billing: Charging more than once for the same service. Upcoding: Charging for a more complex service than was performed. This usually involves billing for longer or more complex office visits (for example, charging for a comprehensive visit when the patient was seen only briefly), but it also can involve charging for a more complex procedure than was performed or for more expensive equipment than was delivered. Medicare documentation guidelines describe what the various levels of service should involve [4]. Miscoding: Using a code number that does not apply to the procedure. Kickbacks: Receiving payment or other benefit for making a referral. Indirect kickbacks can involve overpayment for something of value. For example, a supplier whose business depends on physician referrals may pay excessive rent to physicians who own the premises and refer patients. Another example would be a mobile testing service that performs diagnostic tests in a doctor's office. Kickbacks can distort medical decision-making, cause overutilization, increase costs, and result in unfair competition by freezing out competitors who are unwilling to pay kickbacks. They can also adversely affect the quality of patient care by encouraging physicians to order services or recommend supplies _base_d on profit rather than the patients' best medical interests. In 2000, the Office of the Inspector General issued a fraud alert warning against kickbacks disguised as rental payments [5]. Criminals sometimes obtain Medicare numbers for fraudulent billing by conducting a health survey, offering a free health screening test, paying beneficiaries for their number, obtaining beneficiary lists from nursing homes or boarding facilities, or offering free services, food, or supplies to beneficiaries. Excessive or Inappropriate Testing Many standard tests can be useful in some situations but not in others. The key question in judging whether a diagnostic test is necessary is whether the results will influence the management of the patient. Billing for inappropriate tests—both standard and nonstandard— appears to be much more common among chiropractors and joint chiropractic/medical practices than among other health-care providers. The commonly abused tests include: Computerized inclinometry: Inclinometry is a procedure that measures joint flexibility. Inclinometer testing may be useful if precise range- of-motion measurements are needed for a disability evaluation, but routine or repeated measurements to gauge a patient's progress are not appropriate [6]. Nerve conduction studies: These tests can provide valuable information about the status of nerve function in various degenerative diseases and in some cases of injury [7]. However, personal injury mills often use them inappropriately to follow the progress of their patients. Surface electromyography: This test, which measures the electrical activity of muscles, can be useful for analyzing certain types of performance in the workplace. However, some chiropractors claim that the test enables them to screen patients for subluxations and to follow their progress. This usage is invalid [6]. Thermography: Thermographic devices portray small temperature differences between sides of the body as images. Chiropractors who use thermography typically claim that it can detect nerve impingements or nerve irritation and is useful for monitoring the effect of chiropractic adjustments on subluxations. These uses are not appropriate [6]. Ultrasound screening: Diagnostic ultrasound procedures have many legitimate uses. However, ultrasonography is not appropriate for diagnosing muscle spasm or inflammation or for following the progress of patients treated for back pain [6]. Unnecessary x-rays: X-rays examinations can be important to look for conditions that require medical referral. However, it is not appropriate for chiropractors to routinely x-ray every patient to look for subluxations or to measure the progress of patients who undergo spinal manipulation [6]. Spinal videofluoroscopy: This procedure produces and records x-ray pictures of the spinal joints that show the extent to which joint motion is restricted. For practical purposes, however, simply physical examination procedures (such as asking the patient to bend) provide enough information to guide the patient's treatment [6]. Many insurance administrators are concerned about chiropractic claims for maintenance care (periodic examination and spinal adjustment of symptom-free patients) , which is not a covered service. To detect such care, many companies automatically review claims for more than 12 visits. In 1999, the U.S. Inspector General recommended automatic review after no more than 12 visits for Medicare recipients [8]. Some chiropractors attempt to avoid review by issuing a new diagnosis after the 12th visit. Personal Injury Mills Many instances have been discovered in which corrupt attorneys and health-care providers (usually chiropractors or chiropractic/medical clinics) combine to bill insurance companies for nonexistent or minor injuries. The typical scam includes cappers or runners who are paid to recruit legitimate or fake auto accident victims or worker's compensation claimants. Victims are commonly told they need multiple visits. The providers fabricate diagnoses and reports and commonly provide expensive but unnecessary services. The lawyers then initiate negotiations on settlements _base_d upon these fraudulent or exaggerated medical claims. The claimants may be unwitting victims or knowing participants who receive payment for their involvement [9]. Mill activity can be suspected when claims are submitted for many unrelated individuals who receive similar treatment from a small number of providers. Quackery-Related Miscoding In processing claims, insurance companies rely mainly on diagnostic and procedural codes recorded on the claim forms. Their computers are programmed to detect services that are not covered. Most insurance policies exclude nonstandard or experimental methods. To help boost their income, many nonstandard practitioners misrepresent what they do. They may also misrepresent their diagnosis. For example: Brief or intermediate-length visits may be coded as lengthy or comprehensive visits. Patients receiving chelation therapy may be falsely diagnosed as suffering from lead poisoning; and the chelation may be billed as infusion therapy or simply an office visit [10]. The administration of quack cancer remedies may be billed as chemotherapy. Live-cell analysis may be billed as one or more tests for vitamin deficiency. Nonstandard allergy tests may be represented as standard ones. Services not covered because they were performed outside of the United States may be billed as though they were performed within the United States.
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